KIEV, Aug, 14 - Two of the most senior rebels battling government troops in eastern Ukraine quit on Thursday, deepening the disarray in a pro-Moscow separatist movement that is being pushed back by a Ukrainian military offensive.

The resignations came on the same day that artillery shells landed for the first time since the conflict began in the center of the eastern city of Donetsk, the separatists' main stronghold.

The reverses suffered by the rebels could force a tactical rethink by Russian President Vladimir Putin.
While he has denied directly helping the rebels, his strategy of keeping Ukraine from integrating with the West has benefited from having a part of the country under the control of pro-Moscow separatists.

The most prominent of the separatists to resign on Thursday was a man who goes by the name of Colonel Igor Strelkov and who was defense minister in the self-proclaimed Donetsk People's Republic.

Nicknamed "Strelok" - Shooter - by fighters under his command, he had previously lived quietly in a Moscow suburb where he was known as Igor Girkin. Kiev alleged he was a Russian intelligence officer, which Moscow denied.

Vladimir Antyufeyev, deputy prime minister of the separatist entity in Donetsk region, told Reuters that Strelkov was moving to another, less senior post. He said the new defense minister would be Vladimir Kononov, a native of Donetsk.

"The enemy will be broken. Victory will be ours," Antyufeyev said when asked what prospects for success the rebels now had after the series of resignations.

The head of the self-proclaimed rebel government in Luhansk region, which neighbors Donetsk, also announced he was stepping down. Valery Bolotov said he was injured and could not carry on his duties.

"The consequences of my wounds do not allowing me to fully dedicate myself to this work for the benefit of all citizens of Luhansk in this difficult time of war," Bolotov told reporters on Thursday.

A week ago, Alexander Borodai, prime minister of the Donetsk People's Republic, also quit.

The sense of government forces tightening the noose around the rebels was clear at the separatist headquarters in the center of Donetsk on Thursday.

A Reuters reporter was interviewing Andrei Purgin, deputy to the new separatist prime minister, when artillery shells landed nearby. One man shouted: "Go to the cellar!" and those in the building headed for the stairs, some at a run.

The European Union and the United States accuse Russia of arming the separatists and they have imposed sanctions targeting sectors of the Russian economy, including energy, technology and finance.

Russia says the West is abetting the Ukrainian government in persecuting millions of Russian-speakers who live in eastern Ukraine. It reacted to the sanctions by restricting imports of food products from Western countries.

Putin on Thursday traveled to Crimea, the Ukrainian region his forces annexed earlier this year.

In a speech to Russian ministers and members of parliament assembled in a Crimean hotel, Putin struck a tone that was low-key and conciliatory, saying he wanted to do everything he could to halt the bloodshed in Ukraine.

"We must calmly, with dignity and effectively, build up our country, not fence it off from the outside world," Putin said. "We need to consolidate and mobilise but not for war or any kind of confrontation, ... for hard work in the name of Russia."

Putin's comments lifted the rouble and Russian stocks.
NATO Secretary-General Anders Fogh Rasmussen said, however, that the Russian leader had sounded dovish in the past yet had not followed up his words with concrete actions.

Illustrating the economic pain the standoff is inflicting on Russia, energy giant Rosneft asked the government to lend it $42 million of cash that had been earmarked for Russian pensioners to help it weather the sanctions.

A huge Russian convoy heading slowly towards eastern Ukraine could be a new flashpoint. Moscow says it is carrying 2,000 tonnes of water, baby food and other aid for people in rebel-held areas.

Some Western officials have said they believe the convoy could be a cover for a Russian military incursion - something Moscow has described as "absurd."

By evening on Thursday, the convoy had stopped near the Russian settlement of Kamensk-Shakhtinsky, about 20 km (12 miles) from the border with Ukraine. (rt/ez)